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In an ironic twist, the same week that eBay announces its joint anti-counterfeiting awareness and advocacy campaign with the Council of Fashion Designers of America, it was also held to be responsible for facilitating the sale of counterfeit merchandise on its website www.e-bay.co.uk in Europe.Here’s a summary of the decision.

The case is interesting as eBay plays an interesting role in the dissemination of counterfeit product globally.

The Parties

L’Oreal SA and its subsidiaries launched a proceeding against individual defendants and eBay Inc. and its subsidiaries with regards to the sale of L’Oreal products on the website www.e-bay.co.uk, without L’Oreal’s consent.

The Facts

L’Oreal is the owner of a number of UK trade-mark registrations and Community Trade-mark Registrations, which grants Europe-wide trade-mark protection, for a myriad of products. The individual defendants were selling counterfeit L’Oreal products, as well as products intended for markets outside of Europe and products not intended for sale at all, on e-Bay.

L’Oreal took issue with e-Bay’s capacity of facilitating the sale of counterfeit and unauthorized product in Europe. Moreover, L’Oreal maintains that e-Bay’s sale of keywords and sponsored links further facilitated the sale of counterfeit product.

Judgment

Given that e-Bay is online, its reach is global. The Court was clear that just because a website is accessible globally that may not be sufficient to impose liability. If the website is targeted toward a specific geographic region, and the plaintiff has trade-mark rights in that country that are being infringed, it is appropriate to bring an action against the operator of the website. In this instance, it was very clear that the website was targeted toward Europe and L’Oreal had trade-mark rights in Europe.

The Court also held that as L’Oreal had clearly marked some of the product as “samples” or “not for sale”, it was clear that L’Oreal had specifically withheld its consent to allow these products from being sold in the marketplace.

Some of the products available, although they may not have been counterfeit, were sold without the appropriate packaging. The court held that especially in respect of perfumes and cosmetics, the packaging of the product is an integral component of the product branding. The removal of the packaging negatively affects the goodwill and reputation of the brand. Moreover, there are safety concerns as the packaging oftentimes contains important use guidelines.

eBay, by selecting search words that corresponded to L’Oreal’s trade-marks to those counterfeit or unauthorized products, elevated the opportunity to buy those products. The court held that eBay’s actions placed it as an advertiser of the online marketplace, which places eBay in an intermediary position, rather than as a passive by-stander.I wonder if this decision would have been different if eBay did not provide the opportunity to buy sponsored links or keyword advertising.